Nov 23, 2016

Leading 5 Golden Steps to a Reliable Financial Journey

Lots of youngsters who just recently began earning understand the best ways to make money, however, do not understand or least understand about Saving or Investing their hard-earned money and choosing incorrect financial investment items which yield them minimal returns at the end. Many of them are not thinking about the inflation and are unable to anticipate the amount they need in future for various Short-term and Long-term monetary objectives. These incorrect financial investment steps resulting them in thefinancial crisis. I have seen many young investors selecting wrong Investment products for simply saving the tax and not considering numerous essential aspects for smooth sailing of their financial journey. This short article offers Golden actions or rules to be followed by every Investor for a safe monetary Journey:

Leading 5 Golden Steps Towards a Risk-free Financial Journey

1. Ensure an Emergency Fund

Your primary step towards your monetary journey is maintaining an Emergency fund. As a thumb guideline, it is advised to maintain an emergency fund for the amount which is equal to 6 months of your net regular monthly wage. One easy method to maintain this emergency fund is, start a SIP in a good Liquid fund and continue investing every month into this fund till you attain the needed sum and stop the SIP. Do never touch this amount unless you have any emergency circumstance like any medical emergency or the circumstance like task loss and so on. An excellent liquid fund would yield practically 10% per annum on your corpus and on top of that if you keep this amount more than 3 years, you no requirement to pay any tax on this corpus.

2. Ensure you have a Term Policy

The second most essential action towards your monetary journey is guaranteeing adequate life insurance coverage to look after your dependents throughout any uneven scenario. I encourage, do not take any Endowment policy or Money-back policy. These policies are costly and notsufficient to make sure your dependents in case if you face any irregular event. Take a term policy from a good Life Insurance Company. The easy strategy here is, take a term policy for the sum which amounts to 8 - 10 times of your Annual Gross salary. Expect your annual gross income is 10 Lakhs, then you must take a term policy for 80 Lakhs - 1 Crore. Due to the entry of brand-new Life Insurance companies, the premium rates are readily available at the extremely competitive rate. If you decide for Online Term plan, then you get a minimum 15% discount rate on your premiums. However, selection of Insurance Company is crucial, need to check their claims history. Getting riders like Personal Accident, Critical Illness etc. are added benefit to your policy.

3. Ensure you have Health Insurance

All your household members must be insured with enough Health Insurance. Your business offering Group Health Insurance, it is highly suggested to take one more Health Insurance policy for your entire family. This will be extremely valuable during any task loss scenarios. Do never include your moms and dads into this family floater policy. Take separate Individual policies for your moms and dads. Just recently Union Government has increased the limitation of decrease of health insurance premium from Rs 15,000 to Rs 25,000 and for the senior person, this limit is increased from Rs 20,000 to Rs 30,000.

4. Make sure 25% of earnings is conserved

Whether you are earning 10,000 or 1 lakh, make sure that you are saving 25% of your income monthly. After paying all your Insurance premiums, loans, and other individual expenditures, the left over is your regular monthly savings. Ensure these cost savings should not be less than 25% of your monthly income. Other than Home loans, the other loans are highly advised to settle at the earliest as the Home loans offer up to Rs 2, 50,000 in tax benefits as interest also principal.

5. Guarantee Your Personal Goals are specified

Specifying all your short-term and long-lasting personal goals is extremely important action to finish your monetary journey. Attaching each monetary goal to an appropriate Investment product is important. For all your brief term objectives, connect with low-risky investment item, such as Bank RDs, Debt funds and so on. Similarly, for all your long-lasting objectives, connect with moderate-risk or high-risk products, such as Equity Diversified Mutual funds based on your risk cravings and time horizon. One basic technique here is, take Mutual funds through SIP approach for a longer period would yield high returns.


These basic five steps would take you to the financial destination by looking after all your needs. Take help from any great monetary consultant in choosing right insurance coverage plans and financial investment items.